PSC approves Alliant electric rate hikes totaling 16% over 2 years - Milwaukee Journal Sentinel

PSC approves Alliant electric rate hikes totaling 16% over 2 years

Alliant Energy customers will see a 16% increase in electric bills over next two years
Karl Ebert

Alliant Energy's Wisconsin residential electric customers will pay about $10 more per month, on average, for electric service next year under a two-year rate plan approved Thursday by the Wisconsin Public Service Commission.

The following year, rates will go up again, adding another $8 per month to the average bill, according to a preliminary analysis by PSC staff.

By 2025, the average residential customer will pay an additional $214 per year for electric service, 16% more than this year.

Customers' bills for natural gas service will increase about $4 a month in 2024, but will be essentially flat in 2025, according to the PSC analysis.

What's driving up Alliant Energy's electric rates ?

The primary factor in the rate increases is a massive investment in solar power and battery storage in Wisconsin as Alliant pursues its "Clean Energy Blueprint" for becoming carbon neutral by 2050.

Alliant has a dozen solar farms under development and plans for battery storage at multiple sites and expects to invest $1.9 billion in renewable energy resources to replace energy produced by the coal-fired Edgewater and Columbia generating plants over the next three years.

The company is also investing in new natural gas-powered generating facilities that it needs to meet demand during times of high energy use and when weather conditions limit wind and solar power production.

JP Brummond, Alliant's vice president of customer and community engagement, said the current spending aims to reduce future costs for consumers.

"By investing in a more sustainable and diverse energy mix today, we can avoid long-term costs while delivering greater value, reliability, and choice to customers," he said.

More: The federal Inflation Reduction Act will allow Alliant Energy to fully own solar farms, reduce customer costs by $138 million

When will Alliant's customers see the change on their bills?

The new rate goes into effect on Jan. 1, and customers will start to see the change on their first bill that includes a portion of January. Customers who use the utility's budget billing plan, which evens out peaks and valleys in energy use, won't see the change until their contract renews. That happens every six months.

Were there any wins for Alliant customers?

Commissioners cut Alliant's allowed profit on its investments from 10% to 9.8%. The reduction, combined with the commission's rejection of a request to expand the share of Alliant's operation on which it can earn that profit will save customers about $20 million a year in gas and electric charges next year, according to an analysis by the Citizen's Utility Board.

CUB and Blacks for Political and Social Action of Dane County, which leads a coalition of civil rights and community groups that opposed Alliant's rate increases, urged commissioners to lower the utility's profit margin to no more than 9.3%.

The commissioners deferred consideration of several proposals aimed at reducing energy cost burdens for low-to income households, instead opting to order Alliant to work next year with consumer and community advocates to develop programs to ease the impact of rising energy costs on low-income customers.

That's not necessarily a bad thing, said Tom Content, CUB's exectutive director.

"They're definitely looking at a bunch of things for low income communities," Content said. "I think it's moving forward."

How does this rate case affect the shutdown of the Edgewater coal plant?

The Edgewater Generating Station in Sheboygan is scheduled for retirement in mid 2025, after 40 years of operation.

How to account for unpaid debt of $473 million, primarily for air-pollution controls that were installed less than a decade ago, was a hotly debated topic during the rate case.

CUB, the Wisconsin Industrial Energy Group and others had argued for refinancing $100 million of the outstanding $385 million of the pollution controls through a financial arrangement known as securitization that could save the utilities' customers tens of millions of dollars. CUB also argued that the utility should not be allowed to earn a profit on that debt.

However, the commissioners, recognizing that a decision on how to handle those expenses wasn't required prior to the shutdown, put off consideration of the issue until Alliant's next rate case in 2025.

In deferring the decision, the commission is asking Alliant to do an analysis of alternative funding approaches for the remaining costs at Edgewater that can reduce the burden on customers. That is expected to include securitization, financing programs offered by the U.S. Department of Energy for retiring coal plants and other measures that can reduce how much consumers pay.

Commission Chairwoman Rebecca Cameron Valcq said a similar request was made during Alliant's last rate case, but the utility's response this year was inadequate.

"What we got back was really nothing. And it was incredibly disappointing," she said.